Permanent Residency Provisions of Australia †MyAssignmenthelp.com

Question: Discuss about the Permanent Residency Provisions of Australia. Answer: Introduction: This case is about a man named as Kit who is a permanent resident of Australia. In this case study we need to conclude that whether Kit is a permanent resident of Australia or not and how his salary ad investment income needs to be taxed. To answer the question given above one needs to understand the permanent residency provisions of Australia. As per Australian Taxation Law a person would be regarded as a permanent resident if he passes the resides test Management. In a reside test, a person resides in Australia. But if a person could not pass the reside test then he need to pass at least one of the tests given below: Domicile Test: a person would pass the domicile test if he is having his permanent home in Australia. But if he proves that his permanent resident is outside Australia then he would fail this test as well. The 183 day test: a person would pass this test only when he is in Australia for more than 183 days in that respective financial year. Even if he is there for 182 days, he would not be regarded as a permanent resident of Australia. Superannuation Test: a person would pass this test only if he is an Australian Government employee and he is working in any other country other than Australia. He should be working as a government employee in other country to be an Australian citizen. (AustralianGovernment, 2017) Actually he was born in Chile and was also having a Chilean citizenship, but he was also residing in Australia. He was hired by a United States Company, but most of the time he was working on an oil rig coast near Indonesia. He was working in Indonesia but his wife with her children was permanently living in Australia. He was having a home in Australia, which shows that he had an intention to stay in Australia. Three years back they have also purchased a home and his salary used to get credited in Westpac Bank. He was even coming back to Australia, which shows that his intention was to stay in Australia itself. Hence he would be considered as an permanent Australian resident. If a person is an Australian resident, then all the income earned by him has to be taxable in Australia. Whether the income earned by the person is in Australia or outside Australia, it has to be taxed in Australia. In the same way Kits salary income and his investment income has to be taxed in Australia itself. The double taxation agreement between Chile and Australia has to be ignored in this case. If this double taxation is avoided then he has to pay tax on the investment amount in Australia and as well as in Chile. If the double taxation agreement was not ignored then the investment income would be taxable either in Australia or Chile but not both. Hence as per Australian Taxation Law, Kit is a permanent resident of Australia and so all his incomes earned has to be taxed in Australia. (Visas, 2017) As per this case if a company receives an amount which is in excess of the expense of acquisition then it would be regarded as profits from business. It helps in dealings with mineral rights and also concession for the company while selling the objects of its business. This case helps to understand the provisions of business income earned by the company Management. Company was engaged in various other activities as well and so the High Court had finally decided that company had taken several steps to realize the land in the way which was advantageous to the company. Hence the profit was not assessable. In this case realization of an asset in an enterprising was mainly on capital account. It is not to be considered as revenue in nature. At the end Judicial Terrain had ruled out High Court decision. . (AustralianLaw, 2017) This case highlights the provisions of Section 25 (1) of the Income Tax Assessment Act 1936. The company had made a realization which was more than just a realization of an asset. The earlier decision which was taken in this case was overridden. But the judgment of Gibbs CJ only limits the future application. This decision was then expanded in the case of Whitefords Beach in which personal involvement of the taxpayer in directly affecting the sub-division was of more importance. (AustralianGovernment, 2017) If a loss had occurred from an isolated transaction then it has to be deducted under Section 51(1) ITAA 1936. The two cases would be: A commercial transaction was occurred during the course of business which is already running into losses. It was expected that profit will be earned by the taxpayer and would be assessable. It was finally concluded that the transaction was not carried out like in the business like fashion. The taxpayer did not undertake any work beyond what was necessary to secure the approval of the municipal authorities. For this reason the Court finally advised that taxpayer had continued to hold the land as Action View and it was primarily used for residential and primary production purpose. (CapitalGain, 2017) In this case profit was earned by the company in two parts. One was from the sale of land which came to shareholders and other was from the sale of issued share capital of Malgor Pty Ltd. Courts decision was in favour of the company as the scheme was not advanced to the time when it would have completed the sale. It was concluded that the income derived would not be considered under Sec 25 (1) of the Income tax Act. If the income needs to be charged under Sec 26 (a) then there must be a profit making undertaking which should be essential element in the purpose of the taxpayer to make profit by carrying out a scheme. (Austax, 2017) In this case both Brett and Bradley had intention to erect three townhouses on Addison Avenue Property Management. One of the three houses was planned to be sold for a profit and other two to be used for private residence. As per this tax needs to be charged on the house which was sold for a profit. (Austax, 2017) Works Cited Austax, 2017. austaxpbr.com.au. [Online] Available at: https://austaxpbr.com.au/document/PBR_41369 [Accessed 6th May 2017]. Austax, 2017. austaxpbr.com.au. [Online] Available at: https://austaxpbr.com.au/document/PBR_67178 [Accessed 6th May 2017]. AustralianGovernment, 2017. ato.gov.au. [Online] Available at: https://www.ato.gov.au/Individuals/International-tax-for-individuals/Coming-to-Australia/ [Accessed 6th May 2017]. AustralianGovernment, 2017. ato.gov.au. [Online] Available at: https://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR923/NAT/ATO/00001 [Accessed 6th May 2017]. AustralianLaw, 2017. eresources.hcourt.gov.au. [Online] Available at: https://eresources.hcourt.gov.au/getPdf/1/238280/1_81clr188.pdf?sequence=3isAllowed=y [Accessed 6th May 2017]. CapitalGain, 2017. austaxpbr.com.au. [Online] Available at: https://austaxpbr.com.au/document/PBR_84107 [Accessed 6th May 2017]. Visas, 2017. visasavenue. [Online] Available at: https://www.visasavenue.com/australia-immigration/australia-permanent-residency-faq/ [Accessed 6th May 2017].